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HD Displays improved... well, sorta, I guess... well, maybe not.

07-24-2001, 10:24 AM

I know there's been some discussion here about the poor quality Ridgid machinery displays at some HD stores. In fact, it was mention of that discussion on another woodworking board that made me aware that this one even existed. I, too had noticed the poor Ridgid displays at my local HD (Little Rock, AR, Markham at Chenal store). For the longest time, there wasn't a TS2424 on display at all, nor was the jointer out on display. The machines that were out were dirty and not always complete... the same story that I've heard from others.

Within the last few weeks, I started noticing changes, and figured that all those complaints had been heard and Ridgid had slapped HD's hand and demanded better displays. One day, there was a TS-2424 on the floor. Next time I was in, the display had been cleaned up and there was even a jointer out on display. Then, an adjacent endcap became the display home of some of Ridgid's benchtop machines, and a vacuum or two. "Yeah," I thought, "Ridgid has made 'em clean it up."

Then, I went in the other day to study the BS-1400 up close so I could compare it to a couple of other saws I'm considering. I couldn't really do that, unfortunately, becase there was a big pallet with a 10KW residential generator that was parked right in front of the display, and about as close as you'd dare. It made the RA saw, Drill press, and bandsaw totally inaccessible. "Well," I thought, "They're shifting some stock around. I'll come back in a day or two." This morning, I had to go in on my way to work and get some supplies, and it seemed like a perfect opportunity to kick that bandsaw's tires. Today, other pallets with other generators have joined the one that was there in front of the Ridgid machinery display, making the whole display pretty much useless.

Then, to annoy me even more, I walked around the corner into the tool corral and spotted a TS2400 on a "Work 'n Haul it" stand. I have one of these, and having seen mention here of rumours that it was being discontinued -- and statements to the contrary from Ridgid -- I was surprised to see one of HD's bright yellow tags on it, specifically referring to it as the "Last One." The price on the tag? $497, the same price it's sold for all along. The "Work 'n Haul it" that it was sitting on was priced seperately.

Given the fact that I saw a couple pallet loads of the TS2400/Work 'n Haul it combo bundles sitting in that same store just a few days ago made me wonder what was going on here -- either they've REALLY had a run on 'em and the saws ARE being discontinued, or the HD is trying to sell their beaten-up display for the same price that the new bundles are supposed to be selling for (based on what I've heard from others in stores where they're being promoted).

I thought for a moment that I should try to talk with the store manager and find out the real deal here. Then I walked past the pile of generators in front of the Ridgid machines, and said "Nah, I don't have the time and they obviously don't give a rip, anyway."

Tell me again about why HD has an exclusive on Ridgid's woodworking machines, and how good that is for both HD and Ridgid, and for the customer. Maybe I misunderstood something the first time... 'cause something here just doesn't add up.

After years of expansion, bankrupt competitors, and abundant employment opportunities for skilled but now ex-employees in construction, this is what you get. Bad displays, bad help, overcrowded, understaffed stores and overall, a miserable shopping experience. I am not alone. Most people I know HATE going to HD.

Comment

Do you have another HD near by? Go check it out. We have two stores and one is much better than the other to an unbelievable extreme, different managers???
I know an ex-HD employee and I asked him about everything going on and he pretty much confirmed the problem is the manager, it's not HD's policy or anything like that. I've been thinking maybe everyone with concerns posting here outa go to HD's web site, they gotta have a place to make comments etc. lets let them know that some of there stores aren't up to snuff.

It\'s not the quantity or quality of your tools that matters....<br />It\'s all in the firewood that\'s left over.....

Comment

Check this link. This may be why some of the HD's have cleaned up there act already. After reading this I suspect the others will be soon falling in line. By the way the one here in Manassas, VA has already started to improve.

TLANTA — Walk into a Home Depot (news/quote) during the day, and one thing may strike you by its inescapable presence, another by its conspicuous absence.

There will probably be a big display of energy-efficient wares right up front, under a colorful sign urging you to buy the products to prevent soaring energy prices from siphoning off your tax refund. But there will probably not be many forklifts clogging the aisles, or employees restocking the shelves.

Robert L. Nardelli, who left General Electric (news/quote) to become chief executive of Home Depot in December, has engineered both. He has also made sure that Home Depot's people are clear about his time frame.

"He tells us, `I'm not looking at the calendar; I'm looking at my watch,' " said Bryant Scott, president of Home Depot's chain of Expo Design Centers. These days, Home Depot restocks at night.

And it does seem that everything at the company is moving faster these days. Mr. Nardelli, who calls himself the "consummate do-it-yourselfer," has spent the last seven months installing management systems that Home Depot had never before imagined, and pressing the fast-forward button on ones it had just begun to consider.

Using news about oil prices and tax cuts to push products? His idea. The push to restock shelves at night? Home Depot had been trying it out in a couple of stores, but Mr. Nardelli insisted that every store do it, and by year-end.

"We'd have done all this anyway, but Bob really shifted us into high gear," said Gary Harvin, a regional vice president for Home Depot's mid-South operations.

The company may be hitting high gear just in time. It is facing a big challenge from Lowe's, a fast-growing home-improvement chain based in Wilkesboro, N.C.

Changes at Home Depot's headquarters here are even more drastic. Mr. Nardelli has wiped out a swath of group presidencies and placed several deposed chiefs in charge of areas he wants to see move even faster.

Home Depot had been shuffling toward Internet sales and purchases, but it is now barreling ahead, under the aegis of Rebecca Bass, a new vice president whom Mr. Nardelli hired from a local dot-com.

And he is codifying procedures that were generally seat-of-the-pants under Bernard Marcus and Arthur M. Blank, Home Depot's revered co-founders. There are now formal councils, with members from all levels of the company, to assess and improve how Home Depot handles inventory control, accounts payable and vendor relations.

"He is preserving and nurturing those things that made Home Depot what it is," said Kenneth G. Langone, chairman of Invemed Associates, an investment banking firm, and a member of both the G.E. and Home Depot boards. "But he is bringing in Six Sigma, e-commerce, succession planning, coaching and training systems — all the things that G.E. is noted for and famous for."

HE pace of change is dizzying — but analysts and Home Depot aficionados alike say it is exactly what the company needs. The chain has retailing expertise in abundance, they say. But its return on equity was just 18.9 percent in fiscal 2001, which ended on Jan. 31; a year earlier, it was 22 percent. Operating margins, meanwhile, were down to 9.16 percent, from 9.87 percent, while net margins dropped to 5.65 percent from 6.04 percent.

What Home Depot needs now, analysts figure, is more than a soupçon of G.E.-style efficiency.

"There are embedded costs in this organization, and Nardelli has the skills to drive them down," said David A. Buchsbaum, an analyst at Wachovia (news/quote) Securities.

Home Depot, which earned $2.6 billion on $45.7 billion in sales last year, has grown less by planning than by sheer momentum and, often, happenstance. For example, the company's chain of 32 — soon to be 34 — Expo Design stores, which stress home decor more than two-by- fours, originated in 1991 not as part of any grand plan, but because there was a plum piece of real estate near a Home Depot store in San Diego that the company wanted to keep out of the hands of competitors.

"It was too close to open another Home Depot, so we figured we'd experiment," Mr. Scott, the president of the Expo chain, recalled.

But such serendipitous choices are unlikely to carry the company much further. Home Depot, which pretty much created the big-box category of home improvement stores, is facing increased competition just as the economy is faltering. Until recently, it generally had the biggest markets to itself, with Lowe's, its closest rival, appearing content to operate in smaller suburbs and towns.

But lately, Lowe's has been opening stores in Dallas, Houston, Boca Raton, Fla., and even on Peachtree Street, the main drag in Atlanta, Home Depot's hometown.

"If both those companies keep growing, you'll soon reach a point where there are just enough home improvement stores out there," said Daniel Binder, an analyst at the Buckingham Research Group.

Through a spokeswoman, Lowe's declined to discuss its competitive stance, but Lowe's stores have wide aisles, bright lighting and other cosmetic niceties that appeal particularly to women, a growing factor in the home improvement market.

In response, Home Depot is trying hard to modernize its warehouse look. It has been tinkering with its store formats and product mixes, stocking, say, corrosion-resistant aluminum exterior lights on the West Coast and more brass fixtures inland, and dispensing with 12-foot- high racks that kept too many products out of sight and out of reach.

Home Depot still has many fans on Wall Street. Analysts as a group have a strong buy recommendation on its stock, and Home Depot's market capitalization of more than $115 billion is second only to Wal-Mart (news/quote) among retailers, and far above the nearly $30 billion market cap of Lowe's. Home Depot shares, which closed at $49.65 on Friday, are not far below the year's high of $53.45 on May 24, but nowhere near the $68.50 they hit in March 2000, when Home Depot was a Wall Street darling.

And Lowe's is wooing investors away. Lowe's stock, which has grown far faster in the past year, closed Friday at $38.90. "We have been recommending that people switch out of Home Depot into Lowe's for over a year, and that has been a successful strategy," said Donald I. Trott, an analyst at Jefferies & Company.

ONE of the options available to Home Depot are slam-dunks. It could open still more stores in its major markets, but that would risk cannibalizing its existing stores' sales. It could start carrying new products — apparel, say, or food — but that could blur its image as a home improvement store. It could expand in Europe, but that would force it to grapple with the chaotic economies in some countries, the low home ownership rates in others and the absence of an entrenched do-it- yourself culture in most.

Tick off those concerns to Mr. Nardelli, though, and he shoots them down methodically. Market saturation? "That's a self-fulfilling prophecy," he said, seeming both relaxed and pumped up as he chatted about the company's prospects in a small conference room near his office. Ideally, he said, a Home Depot should be within easy driving distance of about 150,000 households. But as the company tinkers with its product mix, its store layouts and its services, the theory goes, each customer will wind up spending so much more per visit that it will take no more than 50,000 households to support a given store. And as baby boomers age, he said, they will move from being do-it-yourself customers to do-it-for-me customers, which means that Home Depot can raise sales significantly by offering more installation services.

As for new products, Mr. Nardelli sees ample room for diversity within the home improvement category. The company offers the Expo Design stores for home décor and recently opened four Villager's Hardware stores; it also acquired Georgia Lighting, a local chain. In Dallas, Mr. Nardelli is trying out a store specializing in flooring. Two urban Home Depots, in Chicago and Brooklyn, should open soon, as part of a new program to see if the concept can work in smaller stores catering to city dwellers.

"We've got pilots going, and we'll see which ones work," he said.

Nor does the concept of overseas expansion daunt him. G.E. buys nearly 100 companies a year, so acquisitions are business as usual for him. He has his eye on a couple of home improvement chains in Europe that he figures would be solid additions to Home Depot's orange-apron brigade. He would not mention names, but analysts expect that he is talking to, among others, Homebase in Britain; Bauhaus, Praktiker, Hornbach and OBI in Germany; Leroy Merlin in France; and bauMax in Austria.

All told, Mr. Nardelli finds laughable any suggestion that growth at Home Depot will slow. He has pared plans for new stores, to 200 from 225 this year. But he has not tampered with advertising, and he has not cut the sales staff or training. Instead, he is hunting for new revenue sources. Mr. Nardelli expects that Home Depot could be a $100 billion company within a few years.

He is pushing particularly hard to shore up Home Depot's edge with professional customers — the contractors, developers, apartment superintendents and maintenance people at institutions like hospitals and universities. Home Depot already has special professional desks and a designated sales staff for large professional accounts at some stores, and Mr. Nardelli has been having a round of breakfast meetings with those customers to see what else they would like. One result will be the rollout of separate stores catering solely to professionals, with easily accessible loading docks and warehouses replete with large quantities of lumber and other bulky items.

"We had our seat belts on for the last surge of business, but now we're buckling up for a surge to megabusiness," said Greg Turner, president of Home Depot's mid-South division.

Easily said, but Mr. Nardelli has to walk a fine line, shoring up the systems that underlie Home Depot without damaging the gung-ho, almost Amway-like culture that has driven the company since its inception in 1978.

"These people are comfortable in their own skin, and they have no desire to become an industrial company like G.E.," said Gerard R. Roche, the chairman of Heidrick & Struggles and the recruiter who placed Mr. Nardelli at Home Depot. "They want a C.E.O. who initiates spirit, who brings inspiration and leadership to the party."

John F. Welch Jr., the G.E. chairman and Mr. Nardelli's former boss, says he can do it. "You can be a highly gregarious, outgoing guy with a warm touch, and still be a very efficient materials-flow manager," Mr. Welch said. "He's tireless, he'll put rigor into their processes, but he'll motivate the hell out of their team."

Still, when Mr. Nardelli's hiring was announced, the company's 250,000 "associates" — Home Depot, like Wal-Mart, wouldn't dream of calling them just employees — did not know quite what to expect. They were not afraid, exactly. They thought that if Mr. Marcus, the 72- year-old chairman, and Mr. Blank, 58, who has since retired as chief executive, trusted Mr. Nardelli with their baby, they would give him the benefit of the doubt.

But still, someone with no retailing experience? Someone who had just lost what was arguably the most publicized succession race in history — to replace Mr. Welch — and who might well consider the Home Depot slot a consolation prize at best?

Mr. Nardelli picked up on the fierce pride right away. "You get into a room with 300 associates, and suddenly they're yelling, `Give me an H, give me an O,' " he said. "Anyone can acquire technology, but at this place they've got passion, they've created a soul, they allow for emotion."

Mr. Nardelli has been swallowing the Home Depot culture in big, bold gulps. Not once during a recent two- hour conversation did he slip and say "employees" instead of associates, or use "they" in referring to Home Depot or "we" to mean G.E.

He has made the psychological transition from the consummate G.E. company man to the rah-rah Home Depot leader. He led that Home Depot cheer himself eight times in his first week, and does so at meetings several times each week. He has walked the floor at dozens of stores — a tradition for Home Depot executives and board members — and has even spent a half-hour or so working the checkout counter at a couple of them.

UT that does not mean he has not seasoned the cultural brew with several shakes of G.E. salt — its penchant for measuring performance of people and businesses in concrete terms, for asking everyone and anyone for their ideas, sifting through those ideas and then going directly to action without months of cogitation or tests.

"He measures everything — not just sales, but how well we coordinate with other stores, our mix of full-timers and peak-timers on staff, everything," Mr. Bryant said. "We've always been held accountable for performance, but he's ratcheted it up a couple of notches."

In fact, the G.E. way of life has emerged in subtle ways that only true G.E. aficionados may recognize. Every Monday morning, Mr. Nardelli holds a conference call with regional executives, in which they exchange tips on new products or methods, coordinate advertising and staffing plans and update him and one another about what is selling and what is not.

It sounds awfully familiar to Noel M. Tichy, a professor at the University of Michigan Business School who has written extensively about G.E. "Linking salespeople to the top of the organization, using their data to make quick decisions and apply them — G.E. learned that from Wal- Mart," he said, "so it will certainly work well at Home Depot."

Six Sigma, G.E.'s complicated statistical analysis method for quality control, is filtering through Home Depot, too. So is G.E.'s penchant for pushing sales and back-office operations onto the Web. "Last month he asked us how our Web presence was, and we said anemic," Mr. Bryant said. "He said, I want you online in weeks. Guess what — we're going live right now."

But perhaps the most important G.E. concept that Mr. Nardelli is bringing to Home Depot is an emphasis on developing people. "As soon as we learned that Bob wouldn't succeed Jack Welch, I called Jack and said, `Tell me more about this guy,' " Mr. Marcus said. "And Jack said, `His most important attribute is that he knows how to build people.' "

At the fundamental, merchandising level, Home Depot abounds with such skills. "Arthur and Bernie trained us beyond our wildest dreams," said Tom Nichols, manager of the Home Depot store in Roswell, Ga.

UT the company still had to reach outside for a new chief executive after two top executives and possible heirs had to quit for health reasons.

"Succession planning was a deficiency that Arthur and I had," Mr. Marcus acknowledged.

Mr. Nardelli may soon discover that the management vacuum is not a problem just in the executive suite. Mr. Langone, the Home Depot director, says that for far too long, Home Depot promoted managers purely on the basis of their store's sales growth, without a thought to whether they could really take on more responsibility. He points to one manager who performed terrifically running a $50 million store and was then put in charge of a $100 million store. "He's drowning there," Mr. Langone said. "We have to find better ways of spotting and rewarding high-potential people."

Mr. Nardelli and Dennis Donovan, a former G.E. executive who joined Home Depot in April as executive vice president for human resources, have been visiting every divisional office, checking their human resources plans and methods.

They have already started making changes. Some are small and symbolic, like having public relations people report to Mr. Donovan. ("P.R. has to do with reputation, and reputation is an important part of attracting and motivating the work force," Mr. Donovan said.)

Others are more basic, like asking every division to use the same employee appraisal forms. (Forty-eight separate ones are now in use.) "We had too many separate systems that were complicating things," Mr. Donovan said.

Mr. Nardelli and Mr. Donovan have been meeting with people at all levels of the company whom the divisional vice presidents have tagged as having high potential. And they have put into place some of the vice presidents' ideas. For example, they will try to loosen the link between a store manager's bonus and the store's performance, so that successful store managers can more easily be persuaded to try their hand at turning around troubled stores.

OME DEPOT isn't really as much of a culture change for Mr. Nardelli as it might appear. For one thing, his do-it-yourself passion is readily apparent to everyone who knows him. "I'd call him on a Saturday, and find him in his garage fixing a rocker," Mr. Roche, the corporate recruiter, said. "He loves shop work and two-by-fours and fixing things."

And it is not as if he has severed all ties with his past. Home Depot is a big customer for G.E. appliances, and Mr. Nardelli remains in close contact with Jeffrey Immelt, who won the succession race. Home Depot buys lots of masking tape, insulation and other products from 3M, now led by W. James McNerney Jr., the other G.E. also-ran. Although Mr. Nardelli could easily be forgiven if he felt at least a slight rivalry — a desire to prove that maybe he should have been Mr. Welch's first choice — he said he felt nothing of the sort. "The three of us remain very good friends," he said, "and, yes, we talk all the time."

Still, G.E. has been part of Mr. Nardelli's life as far back as he can remember. Some people are army brats; Mr. Nardelli was a G.E. brat. His father worked his way up the G.E. ladder, and the company moved the Nardellis several times, from Old Forge, Pa., where Mr. Nardelli was born, to Scranton. Pa., to Rockford, Ill., and ultimately to Louisville, Ky.

In his youth, however, Mr. Nardelli never thought about following in his father's footsteps. He was more interested in playing football. He attended Western Illinois University on a football scholarship and for a while even thought about coaching.

But two things happened at college: he took what he calls a "smattering" of business law, and liked it. And he fell in love with Susan L. Schmulbach, the sister of a teammate. He married her in June 1971 and started working as a manufacturing engineer less than a week later in G.E.'s Louisville appliance plant. They have four children, ranging in age from 15 to 26.

"The job market was awfully tight in 1971, and I was lucky to get a decent job anywhere," he said. Money was tight, too, and he and his wife bought a classic fixer-upper, finished the basement, added bedrooms and did the wood paneling and wallpaper work themselves.

It was one of the few outside activities for which he had time. From the start, Mr. Nardelli was on G.E.'s fast track, changing assignments every few months, rising to head GE Power Systems, one of the largest units.

Mr. Nardelli, who says he wants to visit at least 200 stores before year- end, has not slackened his pace. He is up at 5:15 each morning, and gets dressed with one eye on the TV news, another on the daily newspapers.

He lives a short commute from the Atlanta headquarters, so he is at the office by 6 a.m. An hour later, he is already on the way to a store or a meeting with regional executives. He rarely gets home before 8 p.m., and weekends often find him in the office, catching up on paperwork.

Nor is Mr. Nardelli the only family member to be spotted in the local Home Depot. His wife has been hitting them lately, too, with architect and designer in tow. The Nardellis have bought what he calls a "huge remodel and repair" house, and Sue Nardelli has become an enthusiastic lumber and cabinetry customer. "We don't even get a discount," he said. No one on staff does, and Mr. Nardelli is not about to pull rank.

Comment

Interesting article. I recall talking with a local HD associate a few months back, and having her tell me about Nardelli and the changes that lay ahead. It sounds like he's a good man for the job.

As I read that article, and saw the specialty stores that HD has experimented with, it made me think that perhaps they need to try developing a tool store -- one that focuses primarily on tools, machinery, etc. Even if it didn't have a physical presence in your town, you can bet that it would have a strong web presence -- and HD's buying power could make the online venture a real competitor against the "big" online tool outlets like Amazon.com's ToolCrib. If amyone could make it happen, Nardelli sounds like the kind of guy who would.

Of course, right now I'd settle for a usable and accessible display of Ridgid machines -- and some good sale prices.

D.

Comment

<BLOCKQUOTE>quote:</font><HR>Originally posted by Dan Case:
Then, to annoy me even more, I walked around the corner into the tool corral and spotted a TS2400 on a "Work 'n Haul it" stand. I have one of these, and having seen mention here of rumours that it was being discontinued -- and statements to the contrary from Ridgid -- I was surprised to see one of HD's bright yellow tags on it, specifically referring to it as the "Last One." The price on the tag? $497, the same price it's sold for all along. The "Work 'n Haul it" that it was sitting on was priced seperately. <HR></BLOCKQUOTE>

I posted this on another thread but it applies here:
All-
When you see a tool at HD that has a yellow tag it does not mean that the tool has been discontinued! It only means that the particular SKU (HD stock tracking #) has been discontinued. In most cases it really means that the SKU has been changed, due to either updates to the tool, promotions or otherwise. Do not think that just because you see a yellow tag that a tool is being drop from the store.